tv [untitled] November 7, 2012 12:30am-1:00am PST
the other question is where we're going. so we have, at 875 stevenson street our repromail operations, treasurer tax collector, assessor, recorder, business property division, department of public works, bureau of street use and mapping, human resources, department of public works and general services agency, as well as city attorney's office claims division. all within the footprint of 875 stevenson. the majority of those folks would move to one location, 1155 market street where we have negotiated a new lease. 1155 market street was the headquarters location of the sf puc. so you may recall they occupied both that building and the building next door at 1145 market street. so there's no confusion i'll refer to 1155 as the headquarters location.
that building is owned by the lors corporation although you see the agreement is with a limited liability company that is a subsidiary of lors corporation recently purchased within the last two years. we've negotiated what we think is a favorable agreement that is of a term of 10 years at 1155 market street. we do have the right to exit after five years, or after 92 months. so we have two opportunities to decide if there is a better location, or part of a greater plan to consolidate services, we have those exit opportunities from 1155 market street. the initial lease rate is $31.67 a square feet. that jumps in the second year to 39.14 a square foot and then 3% increases per year. the reason for the big jump between year one and year two is
that year one is included a few months of what's considered free rent, and the ownership preferred to simply blend that benefit over the term of the first year. included with that rate is a tenant improvement allowance of $25 a square foot and then ability to amortize or pay for over time a 35 dollar square foot tenant improvement allowance over the initial 10 year term. the second entry agreement to cover the relocation of repromail which was sought to be an inappropriate use at the office building of is 155 market we were fortunate enough to find a location at the intersection of 12th street and south van ness, 110 12th street also has an address of van ness.
it would be single use, a little over 10,000 square feet in size. we believe it's ideally situated to service our repromail operations, has a small parking area/yard and ability for adequate loading and very approximate access to the civic center which is the main client base for repromail operations. that particular lease is a 10 year lease as well, with an exit any time after five years. so we have a continual right to exit the property after the fifth year. the initial rate there is $30.95 a square foot per year. that increases 4% per year. the last one let me speak to briefly the exit from 875 stevenson street, the terms of that agreement are that the city completely vacate the premises by no later than february 4, 2013. which we are primed to do.
if we accomplish that successfully, we will receive payment, over all, two different payments but a sum of 3,250,000. so that's the consideration for the early exit. there is some fairly intense calculations in your board package that shows that that compensation adequately covers our physical cost to move. it covers cubicle refinishing, new cubicle acquisitions were necessary although we're pretty much moving around our exiting furniture. we're trying to make this a green efficient relocation. and covers most importantly the differential in the rent. for the rest of this fiscal year and the full term of next fiscal year. so the budget impact of this move is deferred to fiscal year 14-15. that's somewhat consistent with what we would have faced if we hadn't done this agreement. so but for this agreement we
would remain at 875 stevenson street, where we do not have a renewal option, and in mai of 2015 we would have had to have found a location to move to. so we knew this day was coming. this accelerates that day but it brings to the table a fiscal partner to help ease the fiscal impact of the move. we speak to timing. so the reason this is before you, the nature that it is, as opposed to the normal course of a budget analyst review, budget and finance committee hearing, and then to the full board which frankly would have been my preference, is that we were squeezed, really, on both ends. so we had the ownership of 875 stevenson being very clear to us that that exit date of february 4 was firm, there was no negotiating that. once we negotiated the date we had, there was no extension
possible. and there is a fiscal penalty for every day delay of our exit in this agreement. we will receive less money from shornstein for every day of delay. so if we leave on february 5, that will cost the city $10,000 in reduced revenue from that $3.25 million. it's $10,000 a day for the first week, $20,000 a day for every week thereafter. so clearly there is motivation for us to be timely in our exit. secondly, on the entry, there's only so many days between now and february 4, plus we have -- the worst time of the year to put this all together, during the holiday season. so when the construction schedule was coming together, many of these things working in parallel, we found that, because of the one week window next week, where we do not have a board meeting, that one week was
absolutely critical from a standpoint of ordering furniture and other expenses that the landlord will front as is typical in a landlord-tenant agreement. the landlord will front money on an executed lease, but not on a non-executed lease. so reasonably so, we needed to get this item to this board to see the lease approved before further expenditures would be made by the landlord on our behalf, or really on their behalf in order to secure us as a tenant. so i hope that helps give a little perspective as to the timing. certainly happy to answer any questions you may have about any one of these three agreements. thank you for your time in allowing this process to go as it has. >> president chiu: colleagues, any questions to department staff? supervisor kim. >> supervisor kim: thank you. i had one quick question. this is the second time i've seen, in the lease, us using
kind of a landlord advances to front the tenant improvements at an 8% enterrate. being that we're seeing this over and over again i think several of my colleagues has said this is very high if we do choose to participate, and this came up with the department of environment. i was wondering if the department of real estate is thinking in the future, if there are other ways that we can borrow money for these tenant improvements at a lower interest rate. >> well, that's a very good question, and it's timely. because we are seeing this more and more frequently. and the reason we're seeing it more frequently is that the market is changing and there is less of an allowance provided by landlord than there was when the market was softer. so as this market continues to heat up there is less advantage to a tenant. and because of that, then we have to amortize our improvement costs. the challenge we have is each one of these individual deals is have fairly small so we're not talking about a large sum of money which we would normally
think of in terms of a certificate of participation, or other fiscal mechanism we might have to borrow funds at very competitive rates. so we're in a market just like any other tenant is in the market. and what landlords will charge is in this 8% range. we do our best to negotiate something lower but that's where the market stands. i've talked to -- about this concept of could we find a different mechanism to self-finance improvements. we have found where new york city did accomplish that, but it's on a much grander scale. so if there is the possibility perhaps to bundle properties, that might get us enough heft of what we want in debt, and perhaps get a decent return but for small agreements it's very difficult to do anything other than what we're presenting to you at this 8% rate. we are -- i do want to make mention though that our rough
order of magnitude budget at this point has us considerably below what our availability of funds is at 35 a square foot, we're probably 80% of that and we're seeing already value engineering opportunities where that number will only go lower. but in abundance of caution we're providing you numbers that assume full amortization of the entire 35 a square foot. >> president chiu: supervisor campos. >> supervisor campos: thank you, mr. president. thank you for your presentation. just a quick question, just an informational question. there is a way to keep track of how much the city is spending on these kinds of improvements, collectively? i don't know how many of these deals we have, where we're actually, you know, paying or borrowing the money at this interest rate. but to the extent that the individual agreement, you know, is de minimus in terms of the
amount, it might be useful to just keep track so that we at least can consider different ways of dealing with them collectively. >> that's an excellent idea. i'm sure we can work with the controller's office to put together a working matrix as we go forward. >> president chiu: any additional question to city staff? thank you very much. let me ask if there are members of the public that wish to speak on this item. seeing none, public comment on this item is closed. and colleagues, unless there is further discussion, this hearing has been held, and i will close it and file it. and we have in front of us items 9, 10, 11. why don't we -- unless there are additional comments, let's take the items in order. madam clerk, could you call the roll on item 9. >> the clerk: supervisor cohen, aye. supervisor elsbernd, aye.
supervisor ferrell, aye. supervisor kim, aye. supervisor mar, aye. supervisor olague, aye. supervisor wiener, aye. supervisor avalos, aye. supervisor campos, aye. president chiu, aye. supervisor chu, aye. there are 11 ayes. >> president chiu: the resolution is adopted. item 10. >> clerk calvillo: item 10, supervisor cohen -- >> president chiu: why don't we do this same house, same call. without objection this resolution is adopted. item 11, same house, same call. without objection this item is adopted. madam clerk, could you please read the in memories. >> clerk calvillo: today's meeting will be adjourned in memory of the following individual, on behalf of supervisor carmen chu for the late esther -- >> president chiu: any more business in front of the body? >> clerk calvillo: that concludes our business for
he started his first term this january. we are going to get to know him and talk about the issues facing the city. welcome. thank you for joining us today. tell us about your background, where you grew up, went to school, and what kind of jobs to have had. >> i grew up in the philadelphia area, in new jersey. i went to school up and down the east coast. i went to undergrad at duke university. i went to law school at harvard. after clerking for a judge, i came out here in 1997. i have been here for the last 14 years. i have always lived in the castro. i am an attorney. i started out in private practice. i settle private law firm during complex commercial litigation. in 2002, and moved over to the sentences the city attorney's office where i worked on the trial team doing trials for the city, handling my own cases, and
supervising a team of attorneys as well. >> why did you choose to live in san francisco? >> i always assumed i would go back to the philadelphia area since that is where my family is. i was always interested in san francisco in terms of what it is as a city, its culture, it's amazing lgbt community. i came out here for a summer, fell in love with it. i have been interested in politics since i was a kid. i worked on campaigns as a teenager. i was involved campaign against senator jesse helms when i was in college. when i cannot hear, and was not initially involved politically. -- when i came out here, i was not initially involved politically. i helped to build the lgbt community center. i started doing campaigns.
i gradually got involved in democratic party politics. i got involved in the alice b. toklas democratic club. i ran for the democratic central committee in 2004. i ended up sharing the committee. it was a gradual process for me. by the time i started thinking about running for supervisor, it made sense because of my involvement in the community and in politics. >> what did you learn from campaigning for supervisor? >> i learned a lot. i knocked on about $15,000. -- i knocked about 15,000 doors. i met a huge number of people. that is the best way to learn about the neighborhood, the city, and what people want and what their concerns are. i feel i can do so much more than before and started campaigning. -- i feel like i know so much more than before i started campaigning. we're all part of the left on
the national standard. i am a good liberal democrat. in the san francisco spectrum, and probably considered more middle of the road. -- i am probably considered more middle-of-the-road. i am very independently comes to the issues. i do not vote the party line. a judge each issue on its merits. that is how i am. >> what do you feel are some of the biggest issues facing san francisco now? >> the budget is the most imminent issue. we do have a structural budget deficit in the city. we need to deal with the short- term balancing of the budget in a way that does not decimate basic city services that people rely on but also to address our long term structural budget deficit. that means implementing budget reforms that will smooth out the
budget process so that it is not a boom-bust process. that means reforming our pension and retiree system so that they are stable and do not drain the general fund. that is a big aspect of it. another huge issue is the deferred maintenance on our infrastructure. we have a lot of infrastructure that has been deteriorating because we have not maintained properly. that includes roads, sewer systems, muni. we need to be much more diligent about maintaining our infrastructure. some of the big citywide issues that impact the district include transportation. we had more muni service and some other districts. it is not always reliable. some of the major bus lines in the district are not reliable. we have major projects like the renovation of delores park.
it is an opportunity to define what the park is and what changes we want to make to it. that is going to be and port project, the same thing with glen canyon that is going to undergo a lot of work. one of the most challenging parts of the new district supervisor is that we elect the supervisors by district. it is very important to pay attention to the district, be engaged in the projects in the district. we also represent the whole city. any district supervisor that focuses on the district without addressing the citywide issues is not doing his or her job. every day, i make sure i am working on the major citywide issues and the district issues. i try to be disciplined about that.
>> how will you approach the tough choices? >> i think we have to start by looking at the most critical city services that we cannot do without. what are the ones that if they deteriorated, we will pay the price on? public safety falls into that category as a basic critical service. transportation, making sure we have the functional muni is critical. core public health services like dealing with mental on this on our streets -- with mental illness on our streets. if we do not provide services, we will pay the price. it works out from there in terms of budget priorities. >> with your plans on dealing with homelessness? >> it is homelessness in general
and behavior on the streets. we need to make sure people have access to services. i was a supporter of putting the money we taking the money we're putting into the system to provide housing. we need to make sure people have access to services. we need to make sure that we have standards of behavior on our streets. most homeless people did not cause any problems on our streets. they are a small group the causing problems. we need to make sure we have the standards of behavior. there are some kinds of behavior that are not ok and they need to report that. . she mentioned housing needs. what are the housing needs? how should the board of supervisors address these? >> there are a few different areas we need to address. housing affordability or lack there of is a major challenge for the city. it is harder to afford housing
in the city if you are lower or middle income. we need to address that. i want to focus on work force housing. we do a good job of generating high in housing. we can always do better. we do a decent job providing low-income housing. we do a terrible job providing housing for lower middle class and middle-class people, people who are working and paying taxes. we need to have them here for a functioning economy. i am looking for ways to fund more of that kind of housing, particularly for a central employees like teachers, nurses, first responders. we need to make sure that our development is a transit- oriented. we do not want to encourage suburban sprawl. we want to do infill housing so
that people can live near where they work and near public transportation. >> let's talk about public transportation. is there adequate muni service in your district? what is the parking and traffic situation like? >> muni is not near where it needs to be. in the caster, we have the subway. -- in the castro, we have the subway. a can be terrific or frustrating. we are next to the bart line. in other parts of the district, is unreliable. the writeridership is lower bece of unreliability.
other lines are not as frequent and people not think of using them. we have a particular problem in diamond heights. the neighborhood is served primarily by the 52 line. it is incredibly unreliable. the buses miss runs-------. for awhile, muni was ending service at 9:00 or 10:00 at night. it is up on a hill. without service, it is isolated. another thing i am working on is trying to get more taxis onto the street. a world-class taxi system is a complement to any public transportation system. >> how do you think the police department is doing? do you have any thoughts on how the city is dealing with crime? >> i was a big supporter of chief gaston.
i think he will do a great job in the district attorney's office. part of me was sad to see him go from the police department. he had come in and started modernizing the department. it's technology -- a lot of different changes that needed to happen but were not happening until he came in and start of the department on the right path. it is critical that whoever the next chief of police is continue that modernization of the department. it will have benefits citywide. in my district, we have public safety challenges. the district is often viewed as a "safe district." we do have violence. we had a bunch of violence around delores park last year. there have been robberies in glen park and parts of the valley. there have been shootings in diamond heights.
one of the challenges is making sure that the police department understands that even though we may not have the same crime levels as some neighborhoods, we still need attention from the police department. >> let's talk about the city's economic development. are we on the right track? what would you like to change about the approach to developing the economy? >> we are getting better. the city as got more proactive about attracting businesses and new industries and providing incentives for them to come and stay here. it is still a very expensive place to do business in terms of the cost of labor, land. we need to make sure that we are not taxing businesses to the point that it is not profitable and we are not attractive for them to be here. we need to reform our payroll tax.
that is an incentive not to create jobs. i know the board president david chu is working on possibility this there -- possibilities there. i look forward to working with him. we've targeted efforts to revitalize areas and bring industries here with the tax holiday and proposal introduced yesterday relating to parts of the tenderloin to provide some payroll tax relief to encourage businesses like twitter and others to go there. >> the governor has proposed eliminating funding for redevelopment agencies. what is your opinion of the plan? what are your thoughts on the value of redevelopment agencies? >> i think the plan is over- broad. i do not support it as it relates to san francisco's model
of redevelopment. our redevelopment agency does tremendous work in san francisco. a lot of projects like treasure island and what is happening in hunters point, those kinds of projects would be difficult to achieve without redevelopment. a redevelopment agency is the largest source of affordable housing creation in the city. it has been a huge asset. i understand there are other parts of the state where redevelopment has a different model and is not as positive. there are types of unwise development. redevelopment statewide is in need of reform. san francisco is a model for redevelopment and it needs to stay intact. >> let's talk about the role of sports. are you happy with the plans for
the america's cup? should the city spend money to keep the 49ers'? >> i am thrilled about the america's cup. it will not just be an economic boom that creates jobs and long- term economic development. it will help us shore up our aging and deterioration appears -- deteriorateing piers. it will help us clear of deferred maintenance. it will be a promotion for the city. people will see the panoramic views of san francisco and want to come here. i would very much like to see forty-niners stay here. what that means, we will have to talk about it. i am not a big fan of massive public subsidies to sports teams. i think we should work hard to keep them here. >> we're almost out of time. are there any other issues or concerns we have not